The sheer number of offerings can be intimidating to anyone thinking about investing in a retirement plan for the first time. It's easy to get confused, especially when it comes to tax-advantaged plans versus employer plans.
We've developed this retirement planning guide to help users figure out what might be the best option in their particular situation. Using a series of questions that appear below, we'll try to help determine what types of retirement plans to consider when faced with multiple options. We'll also try to help users decide which fund is likely to yield the highest return.
The way this retirement guide works is very straightforward. We're going to ask a series of questions, and depending on the answer, we make an investment suggestion. Remember, the goal here is to save money for retirement, so it's important to take advantage of 401(k) plans, 403(b) plans, Roth IRAs and Traditional IRAs whenever possible. This guide should help users to make an informed decision when faced with all of these options.
When thinking about the answers to some of these questions, users should think about factors such as their tax rate in retirement, whether or not they're eligible to make IRA contributions, and how easy it is to contribute to certain plans; especially payroll deduction plans offered through an employer.
Question 1: Does your current employer sponsor a retirement plan such as a 401(k) or 403(b) plan?
Question 2: Does your employer match your contributions to a retirement plan such as a 401(k) or 403(b) plan?
Question 3: Are you contributing enough money to your employer plan to obtain the maximum match for which you're eligible?
Question 4: Are you currently contributing to a Roth IRA or Traditional IRA retirement account?
Question 5: Are you making the maximum contribution to a Roth IRA account or a Traditional IRA?
Question 6: Do you have a spouse that currently earns little, if any income?
Question 7: Are you looking for other tax deferred retirement options to fund your retirement years?
This guide should help users to understand how to progress down the path of retirement planning. The single most important factor to remember is this simple rule. Investing for retirement is just as important as any other investment someone might make, whether it's in a college degree or a new home. Don't shortchange the future by ignoring the retirement options today.
While the above retirement planning guide can help users to figure out which type of retirement account they might want to start funding, it really doesn't help answer the question: How much money should I be saving for retirement?
To help answer that question, we've put together a series of retirement calculators. We have tools ranging from 401(k) savings calculators to Roth versus Traditional IRA decisions, and even a calculator that can help users to figure out how much retirement income they'll need.
About the Author - Investing in Retirement Plans (Last Reviewed on November 8, 2016)